A few years after questioning bitcoin’s role in the financial markets, the former Federal Reserve governor Kevin Warsh has changed his mind, saying that owning BTC “makes sense” now.
Furthermore, he breached the decade-old comparison between bitcoin and gold and said that the cryptocurrency is taking portions of the yellow metal’s market share.
The primary cryptocurrency has a history of changing people’s minds. Previous examples include MicroStrategy’s Michael Saylor and CNBC’s TV host Jim Cramer.
Warsh, a 50-year-old US academic, financier, former Fed governor, and partner of Stan Druckenmiller used to be on the side of BTC doubters.
He said in 2018 that the asset’s “price volatility significantly diminishes its usefulness as a reliable unit of account or an effective means of payment.” He also predicted that new cryptocurrencies will take away bitcoin’s spot as they will “better satisfy” people’s needs.
However, he seemed more bullish on BTC during a recent appearance on CNBC’s Squawk Box.
“I think bitcoin does make sense as part of a portfolio in this environment where you have the most fundamental shift, for example, at monetary policy since Paul Volcker. This is a big shift that we are seeing under the Powell Fed, rightly or wrongly. I’m not surprised, in a period of a dollar weakness where bitcoin is doing what it is doing.”
Warsh also touched upon the popular narrative that bitcoin and gold compete for the same type of investors. He believes that BTC’s rise has actually halted the precious metal’s potential gains.
“If bitcoin never existed, gold would be rallying even more right not, but I guess if you are under 40, bitcoin is your new gold.”
The former government official said that BTC is getting “new life as an alternative currency” as days go by and its price continues to appreciate, especially when compared to the decreasing purchasing power of fiat currencies.
CryptoPotato reported recently that Anthony Scaramucci, the founder of the investment firm SkyBridge Capital, shares the same opinion on the bitcoin and gold debate. Moreover, he claimed that the cryptocurrency is the better version of gold, as it’s easier to store, more portable, and harder to steal.
On the other hand, the fund manager Bill Miller also highlighted the depreciating fiat currencies and said that BTC works as a “rat poison” for cash.
